Establishes loan redemption program for persons with
Master’s Degree in Business Administration or other business-related fields of
study or Juris Doctorate and provide consulting or legal services to small
business and legal services clients.

CURRENT VERSION OF TEXT

As introduced.

An Act establishing a loan redemption program for certain
graduates who provide volunteer services and supplementing chapter 71C of Title
18A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Approved course of study”
means a graduate level program leading to a Master’s in Business Administration
or a Master’s Degree in Accounting, Finance, Informational Systems, Marketing,
Management, Organizational Management, or other business-related field of study
as determined by the authority, or leading to a Juris Doctorate.

“Eligible qualifying loan
expenses” means, in the case of an applicant who has graduated from an approved
course of study, the cumulative outstanding balance of student loans covering
the cost of attendance while enrolled in the approved course of study at the
time the applicant is selected for the loan redemption program; and in the case
of an applicant who is enrolled in an approved course of study at the time the
applicant is selected for the loan redemption program, the cumulative
outstanding balance of student loans covering the cost of attendance for the approved
course of study at the time of graduation from the approved course of study.

Interest paid or due on
qualifying loans shall be considered eligible for reimbursement under the
program.

“Full-time” means a minimum of
35 hours per week.

“Program participant” means a
person who, following the effective date of this act, provides volunteer
business consulting or legal services pursuant to the provisions of this act
and enters into a redemption contract with the authority.

“Qualifying loan” means a government
or commercial loan for the actual costs paid for tuition and reasonable
education and living expenses relating to an approved course of study.

“Small business” means a
business which has its principal place of business in the State, is independently
owned and operated, and meets all other qualifications as may be established in
accordance with P.L.1987, c.55 (C.52:27H-21.7 et seq.).

2. There is established in
the Higher Education Student Assistance Authority a loan redemption program for
persons who hold a Master’s in Business Administration or a Master’s Degree in Accounting,
Finance, Informational Systems, Marketing, Management, Organizational
Management, or other business-related field of study as determined by the
authority, or a Juris Doctorate, and who provide volunteer business consulting
or legal services to a small business through the New Jersey Business Action
Center in the Department of State or who provide volunteer legal services
through Legal Services of New Jersey. A person who holds an undergraduate
degree in a business-related field and who is enrolled in a business-related
graduate level program and who provides such volunteer service may also
participate in the loan redemption program. The program shall provide for the
redemption of a portion of the eligible qualifying loan expenses for each year
of volunteer service.

3. To be eligible to
participate in the program, a person shall:

a. be a resident of the
State and maintain domicile in the State during participation in the program;

b. have graduated from an
approved course of study or have a baccalaureate degree in a business-related
field and be enrolled in a business-related approved course of study, offered
by an accredited institution of higher education;

c. have been selected by the New
Jersey Business Action Center to provide volunteer consulting or legal
services to a small business or selected by Legal Services of New Jersey to
provide volunteer legal services to its clients;

d. agree to perform the
required volunteer service obligation in accordance with section 4 of this act;
and

e. satisfy any additional
criteria the authority may establish.

4. a. A program
participant may redeem eligible qualifying loan expenses upon execution of a
contract between the program participant and the authority. The contract shall
be for a specified number of one-year periods, shall indicate if the volunteer
service is to be provided on a full-time or part-time basis during the one-year
period, and shall specify the total amount of debt to be redeemed by the State
in return for service pursuant to subsection b. of this section.

b. The maximum redemption of
loans under the program shall amount to 15% of principal and interest of
eligible qualifying loan expenses in return for one full year of full-time
volunteer service, an additional 15% for a second full year of full-time
volunteer service, and an additional 15% for a third full year of full-time
volunteer service, for a total redemption of 45% of eligible qualifying loan expenses.
In the event that the redemption contract provides that the volunteer service
shall be provided on a part-time basis, the authority shall prorate the annual
loan redemption amount in accordance with the number of hours of volunteer
service provided by the program participant during that year.

Prior to the annual redemption
of loan indebtedness, a program participant shall submit to the authority proof
of the required volunteer service certified by the New Jersey Business Action Center
or Legal Services of New Jersey, as appropriate.

In the case of a program
participant who is enrolled in an approved course of study at the time of
participation in the loan redemption program, the authority shall redeem the
eligible qualifying loan expenses upon the graduation of the program
participant from the approved course of study.

c. A program participant who
has entered into a redemption contract with the authority may nullify the
contract by submitting written notification to the authority and assuming full
responsibility for repayment of principal and interest on the full amount of
his loans or that portion of the loans which has not been redeemed by the State
in return for partial fulfillment of the contract.

d. In case of a program
participant’s death or total and permanent disability, the authority shall
nullify the service obligation of the program participant. The nullification
shall terminate the authority’s obligations under the loan redemption
contract. If continued enforcement of the contract results in extreme
hardship, the authority may nullify or suspend the service obligation of the
program participant.

e. In the case of a
program participant’s conviction of a crime or an act of gross negligence in
the performance of service obligations, the authority is authorized to
terminate the program participant’s participation in the program.

5. The New Jersey Business
Action Center or Legal Services of New Jersey may provide a program participant
who is providing full-time volunteer service under the redemption program with
a stipend in such amount as it determines but which shall not exceed $30,000
per year.

6. The authority shall
annually submit a report on the program to the Governor, and to the Legislature
pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1). The report shall be
submitted no later than August 1 of each year and shall include, but not be
limited to, information on the total number of participants receiving loan
redemption under the program, the number of participants who are providing
volunteer services on a full-time basis and those providing volunteer services
on a part-time basis, the number of participants who are graduates of an
approved program and the number who are enrolled in an approved program, the
number of participants who are providing small business consulting and legal
services through the New Jersey Business Action Center and the number of
participants who are providing legal services through Legal Services of New
Jersey, and the impact of the program on the enhancement of small business in
the State and on providing legal services to the poor.

7. The Higher Education
Student Assistance Authority shall adopt rules and regulations pursuant to the
“Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), necessary
to implement the provisions of this act. The authority shall consult with the New
Jersey Business Action Center and Legal Services of New Jersey prior to the
adoption of the rules and regulations.

8. This act shall take
effect immediately.

STATEMENT

This bill establishes a loan
redemption program in the Higher Education Student Assistance Authority for
persons who hold a Master’s in Business Administration (MBA) or a Master’s
Degree in Accounting, Finance, Informational Systems, Marketing, Management,
Organizational Management, or other business-related field of study as
determined by the authority, or a Juris Doctorate, and who provide volunteer
business consulting or legal services to a small business through the New
Jersey Business Action Center or provide volunteer legal services through
Legal Services of New Jersey. A person who holds an undergraduate degree in a
business-related field and who is enrolled in a business-related graduate level
program and who provides such volunteer service may also participate in the
loan redemption program. The bill defines the above categories of graduate
level programs as approved courses of study.

To be eligible to participate
in the program, a person must: (1) be a resident of New Jersey and maintain
domicile in the State during participation in the program; (2) have graduated from
an approved course of study or have a baccalaureate degree in a
business-related field and be enrolled in a business-related approved course of
study, offered by an accredited institution of higher education; (3) have been
selected by the New Jersey Business Action Center to provide volunteer
consulting or legal services to a small business or selected by Legal Services
of New Jersey to provide volunteer legal services to its clients; and (4) agree
to perform the required volunteer service obligation.

Under the bill, a program
participant would redeem 15% of eligible qualifying loan expenses for each full
year of full-time volunteer service for a total redemption of 45% of eligible
qualifying loan expenses. In the event that the redemption contract provides
that the volunteer service will be provided on a part-time basis, the authority
will prorate the annual loan redemption amount in accordance with the number of
hours of volunteer service provided by the program participant during that
year. Prior to the annual redemption of loan indebtedness, a program
participant must submit proof to the authority of the required volunteer
service certified by the New Jersey Business Action Center or Legal Services of
New Jersey, as appropriate. In the case of a program participant who is
enrolled in an approved course of study at the time of participation in the
loan redemption program, the authority will redeem the eligible qualifying loan
expenses upon the graduation of the program participant from the approved
course of study.

The purpose of this bill is to
encourage graduates with particular areas of expertise to lend that expertise
to the enhancement and development of small business in the State as well as to
assist the State’s low-income residents with legal issues they may face. This
bill will provide a pool of individuals who may serve as a resource for the
clients served by the New Jersey Business Action Center and Legal Services of
New Jersey.